- V-Guard Industries shares have rallied 3,985% since listing in 2008
- Consumer-durable company expects sales to rise 12% this fiscal year
- IOT next big step for company, says MD Mithun Chittilappilly
The company, which started 40 years ago with a mere 100,000 rupees, now has products ranging from food mixers to fans and is betting that rising personal incomes in the world's second-most populous nation and more than a billion mobile-phone connections will boost its sales further.
"IOT is the next big step for our company as smart-phone users are expected to rise every passing day and more people are becoming tech savvy," Managing Director Mithun Chittilappilly said by phone from his office in Kochi. The company plans to sell "smart fans" after introducing water heaters and power back-up systems that use similar technology, he said.
V-Guard expects sales to rise 12 percent in the fiscal year through March 31, missing its target of 15 percent annual growth through the end of March 2022, after it passed on a higher tax rate to its customers following the recent introduction of a national goods and services levy. Revenue growth is expected to recover to at least 15 percent in its new financial year starting April, Chittilappilly said.
Still, increasing competition along with higher copper prices are emerging as V-Guard's "key risks," according to Sathyanarayanan M., an analyst at Cholamandalam Securities Ltd., who rates the stock as underperform. "IOT is still in a nascent stage and it really needs to be seen how things pan out on that front," he said. V-Guard has 10 buy ratings, six holds and two sell recommendations.
Revenue will get a further boost as the "price premium of IOT products over normal appliances starts coming down," Chittilappilly said. Sales rose 11 percent in the March to December period of this financial year compared with the same nine months a year earlier, the company said in a filing Monday. They increased 16 percent in the 2016-2017 fiscal year.
"IOT is the future for sure and V-Guard has a kind of first-mover advantage as it's among the top three Indian companies for products that can be upgraded with IOT services," Aditya Bhartia, an analyst at Investec Capital Services India Pvt. in Mumbai who rates the shares as buy, said by phone. V-Guard is "an extremely well-managed company with a very strong brand value," he said.
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